Ford Reports Second Quarter Loss Because of Tire Replacement
Action
-- Including Firestone costs, $551 million loss or 30 cents per share
(excluding one-time charges worth $201 million or 11 cents per share).
-- Continued strong cash position of $18.9 billion, including VEBA.
-- Full-year 2001 earnings outlook affirmed at $1.25-$1.35 per share.
DEARBORN, Mich., July 18 Ford Motor Company
reported a loss of $752 million, or 41 cents per diluted share, in the second
quarter of 2001. The cost to replace 13 million Firestone tires to ensure
customer safety and satisfaction more than accounted for the loss. As
previously announced, the tire action is expected to cost $2.1 billion after
taxes. Essentially all of the costs were reflected in the second quarter.
"Our decision in May to replace 13 million potentially unsafe Firestone
tires was an unprecedented action," said Jacques Nasser, president and CEO.
"Although we're disappointed it resulted in a second quarter loss, it was the
right thing to do for the safety and trust of our customers."
Excluding $201 million in charges for Ford's share of Mazda Motor
Corporation's restructuring actions reported in April and the new accounting
standard on hedging and derivatives, Ford lost $551 million, or 30 cents per
diluted share. On a comparable basis, Ford earned $2.53 billion, or $1.18 a
share, in the second quarter of 2000.
Ford's worldwide vehicle unit sales in the 2001 second quarter were
1,858,000, down 7 percent from 1,995,000 in the year-earlier quarter.
Revenues were $42.31 billion, a 5 percent decline from $44.50 billion a year
ago.
The following results include the Firestone tire replacement costs, but
exclude one-time charges that were taken in the second quarter of 2001, and
charges for a European restructuring and Visteon Corporation recorded in the
2000 second quarter.
AUTOMOTIVE OPERATIONS
Worldwide automotive operations lost $1.03 billion in the second quarter,
compared to a profit of $2.07 billion a year ago. Worldwide automotive
revenues were $34.55 billion, compared with $37.37 billion a year ago.
Automotive gross cash at June 30 totaled $18.9 billion, including $2.7
billion of pre-funding employee benefit expenses through a Voluntary Employee
Beneficiary Association (VEBA) trust. A continued focus on working capital
contributed to the company's strong cash position.
North America: The second quarter loss in North America was $1.14 billion.
Earnings in the 2000 second quarter were $1.84 billion. In addition to the
tire action, 2001 second quarter results were negatively affected by lower
unit sales volumes and higher marketing costs.
Europe: Ford earned $141 million in the second quarter in Europe, compared
to $156 million a year ago. Higher volumes for Ford-brand vehicles, fueled by
strong demand for the new Ford Mondeo and Ford Transit, were offset by losses
at Land Rover and the launch of the Jaguar X-TYPE.
South America: Ford operations in South America lost $70 million, compared
to a loss of $63 million a year ago. Results reflect weaker economic
conditions in Brazil and Argentina.
Rest-of-world: Results from the rest of the world were a profit of $47
million compared to a profit of $135 million for the 2000 second quarter. The
decline is primarily attributable to Ford's share of Mazda losses.
FORD CREDIT
Ford Credit earned $399 million in the second quarter, up from $388
million a year ago.
HERTZ
The Hertz Corporation reported a profit of $59 million. A year ago, Hertz
had second quarter earnings of $104 million. Slowdown in the economy and
related business travel, and a more difficult pricing environment, led to the
lower results.
OUTLOOK
"The second quarter was a difficult one for the Ford Motor Company.
However, we launched great new products, including an all-new version of the
Ford Explorer and Jaguar X-TYPE, and we're encouraged by the early market
reactions," Nasser said.
"Despite the challenges we face, Ford remains in a strong competitive
position. We have great brands and great products, and an integrated
leadership team that's highly focused on the business. In addition, our
balance sheet remains strong, and we continue to expect full-year 2001
earnings per share to be in the range of $1.25-$1.35," Nasser said.
Investors can hear a review of first quarter results by Henry Wallace,
chief financial officer, on the Internet at http://www.streetevents.com or
http://www.streetfusion.com . The presentation will start at 9 a.m. EDT, July 18.
Ford Motor Company is the world's second largest automaker, selling
vehicles in 200 markets and with approximately 345,000 employees on six
continents. Its automotive brands include Aston Martin, Ford, Jaguar, Land
Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services
include Ford Credit, Hertz and Quality Care.
Statements included herein may constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties, and other factors
that could cause actual results to differ materially from those stated,
including, without limitation: greater price competition in the U.S. and
Europe resulting from currency fluctuations, industry overcapacity or other
factors; a significant decline in industry sales, particularly in the U.S. or
Europe, resulting from slowing economic growth; lower-than-anticipated market
acceptance of new or existing products; currency or commodity price
fluctuations; economic difficulties in South America or Asia; higher fuel
prices; a market shift from truck sales in the U.S.; lower-than-anticipated
residual values for leased vehicles; a credit rating downgrade; labor or other
constraints on our ability to restructure our business; increased safety or
emissions regulation resulting in higher costs and/or sales restrictions; work
stoppages at key Ford or supplier facilities; and the discovery of defects in
vehicles resulting in recall campaigns, increased warranty costs or
litigation.
Ford Motor Company and Subsidiaries
HIGHLIGHTS
Second Quarter First Half
2001 2000 2001 2000
(unaudited) (unaudited)
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- North America 1,142 1,308 2,245 2,619
- Outside North America 716 687 1,425 1,290
Total 1,858 1,995 3,670 3,909
Sales and revenues (in millions)
- Automotive $ 34,552 $ 37,366 $ 69,202 $ 73,541
- Financial Services 7,762 7,133 15,558 13,862
Total $ 42,314 $ 44,499 $ 84,760 $ 87,403
Net income (loss) (in millions)
- Automotive $ (1,194) $ 1,052 $ (505)$ 2,604
- Financial Services 442 461 812 841
Income (loss) from
continuing operations (752) 1,513 307 3,445
- Discontinued operation (Visteon) - 162 - 309
- Loss on spin-off of Visteon - (2,252) - (2,252)
Total $ (752) $ (577) $ 307 $ 1,502
Capital expenditures (in millions)
- Automotive $ 1,229 $ 1,453 $ 2,586 $ 2,952
- Financial Services 99 158 230 464
Total $ 1,328 $ 1,611 $ 2,816 $ 3,416
Automotive capital expenditures as
a percentage of sales 3.6% 3.9% 3.7% 4.0%
Stockholders' equity at June 30
- Total (in millions) $ 13,758 $ 24,643 $ 13,758 $ 24,643
- Annualized after-tax return on
Common and Class B
stockholders' equity Loss 22.9% 3.8% 25.4%
Automotive net cash at June 30
(in millions)
- Cash and marketable
securities $ 16,205 $ 25,557 $ 16,205 $ 25,557
- Debt 12,061 10,804 12,061 10,804
Automotive net cash $ 4,144 $ 14,753 $ 4,144 $ 14,753
After-tax return on sales
- North American Automotive (4.9)% 6.7% (1.0)% 6.4%
- Total Automotive (3.4)% 2.9% (0.7)% 3.6%
Shares of Common and Class B Stock
(in millions)
- Average number outstanding 1,819 1,205 1,829 1,206
- Number outstanding at June 30 1,812 1,205 1,812 1,205
Common Stock price (per share)
(adjusted to reflect Visteon spin-off)
- High $30.71 $31.46 $31.37 $31.46
- Low 24.00 23.08 23.75 22.53
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income assuming dilution
- Automotive $ (0.65) $ 0.86 $ (0.28)$ 2.12
- Financial Services 0.24 0.38 0.44 0.69
Subtotal (0.41) 1.24 0.16 2.81
- Discontinued operation (Visteon) - 0.13 - 0.25
- Loss on spin-off of Visteon - (1.84) - (1.84)
Total $ (0.41) $ (0.47) $ 0.16 $ 1.22
Cash dividends $ 0.30 $ 0.50 $ 0.60 $ 1.00
